Monday, August 24, 2009

Goldman Sachs - Smartest Guy's Stupidest Guy's

Goldman Sachs (GS) seems to be in a PR quandary about bonuses. Main street wants someone to pay and Goldman Sachs is a good enough victim. Solution: Take the big bonus producing area’s and go private and stop reporting the numbers publicly. Everyone will know enough but the public will not have official access. Side partnerships, joint ventures there are lots of ways to structure that one. Financial engineering at its best.

Then the Wall Street Journal nails them with a story about stock trading tips and how some customers have a country mile advantage on trading idea’s. Goldman Sachs retorts back that some customers are long term and short term stuff is not for them. Goldman if you do not watch it the politicians will re-structure you. Politicians have no problem with killing the goose that lays the golden egg.

Perception is reality. Goldman is working for itself first and clients a distant second. Of course it depends what kind of client you are. Watch for the law suits and regulatory investigations.

The smartest guys in the room may just become the stupidest guys because they cannot figure out the political game.